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GANDER MOUNTAIN BACK ON ITS FEET AND GROWING

BY KAREN M. KROLL

Gander Mountain wants to set up shop wherever there is hunting and fishing.

Gander Mountain, a destination for enthusiasts of the outdoors, is enjoying a second lease on life after a brush with catastrophe.

The privately held, Bloomington, Minn.-based company does not disclose exact figures, but says it enjoyed double-digit sales growth during the most recent holiday season — in contrast to many other retailers, which struggled to hold their ground. Today Gander Mountain, named after a recreational area in Wisconsin, operates 57 stores throughout the Great Lakes states and is looking to expand to other parts of the country. The chain sells a wide range of gear for hiking, hunting, fishing and water sports, and its executives expect that it will become one of the largest suppliers of kayaks in the United States within the next five years.

What a contrast to its situation only a few years ago.

In 1996 it was a public company with about 20 stores and a catalog operation. But running both the retail and catalog outlets proved to be too much, as did the pressure of opening new stores at a rate to satisfy investors, said Todd Rymer, the director of real estate, who has been with the company for 14 years. The chain filed for bankruptcy in 1997.

“Everything that you can think of probably contributed to the financial troubles,” Rymer said.

Gander Mountain’s management sold the catalog operation to Sidney, Neb.-based competitor Cabela’s in 1996 for about $35 million in cash (see story). Holiday Cos., a Bloomington, Minn.-based operator of convenience stores, bought five of the Gander stores that year and the remainder over the next year or so when Gander filed for bankruptcy.

Better things happened to the chain shortly thereafter. Stephen Watson, former president of Minneapolis-based Dayton Hudson Corp. (now Target Corp.), came on board in 1997 as CEO.

“He was able to bring both control and vision,” said Jeff Bergmann, the chain’s vice president of marketing. “He saw the opportunity available in consolidating in a market that’s run by a lot of mom and pops.” Watson retired last August, and Mark Baker, formerly COO of The Home Depot, took over.

Now top brass has decided to expand. In March the company opened at a former Kmart store in the Chicago suburb of Geneva. And it plans to add six to eight more units this year, including New York stores in Rochester and Buffalo, for which the company at press time was negotiating leases.

Driving sales
So what’s behind the chain’s current success? In part, it’s that the outdoor-gear market runs counter to the overall economy, says Ellen Moore, who calls herself a “customer experience optimizer,” at Carton Donofrio Partners, a marketing and brand consulting firm in Baltimore. (Carton Donofrio has not done any work for Gander Mountain.) As more people stick closer to home for vacation, given the general uneasiness about the U.S. economy and the Middle East conflict, they are rediscovering the outdoors, said Moore, who was previously president of Alanby Outfitting for the Outdoors, a chain of outdoor stores in Charlotte, N.C.

Having the right product at the right time and at the right price helps too, Rymer notes, explaining that employees at each store help cater to local tastes by selecting merchandise. They also work closely with distributors to keep inventory on the shelves. On occasion, employees have obtained products from competitors to ensure that their stores have what customers want, Rymer said. The involvement and enthusiasm of Gander Mountain employees is another key thing, executives say.

“They love to hunt, fish and camp,” said Baker. “Their excitement is contagious, and customers seem to feed off their exceptional knowledge.” Associates undergo some 40 hours of training. On the sales floor, they can help customers learn to use a global positioning system unit (a radio-wave device useful if one is lost) or to decide what type of insulated shoe will work best for an approaching hiking trip.

It is crucial that an outdoor-adventure store employ sales associates that are as devoted to their recreation as the customers, Moore asserts.

“Outdoor enthusiasts are passionate about their experiences,” she said. “They’re looking for something that speaks to them on their level.”

Moving on
Gander Mountain executives are looking to “backfill all of the Great Lakes states,” Rymer said, but further down the road will look at areas in the South and West where hunting is popular.

As for specific locations, management looks for the “typical retail things, such as good visibility and easy access,” he added. Right now all stores are in strip centers, but the company is considering some enclosed malls. The first of these, Washington (Pa.) Crown Center, is to open in August.

There are some great deals turning up on stores formerly occupied by Kmart and Ames, according to Rymer.

These include a former Ames site in Tonanwanda, N.Y., to open in June; and another in Harrisburg, Pa., slated for early fall. Further, two retail spaces in Henrietta, N.Y., HomePlace and MJ Design, will be merged to form a Gander Mountain. “We can take the space and make something special,” he said. “And these tend to be priced right.”

Like other outdoor activities retailers, Gander Mountain is fortunate to have some latitude when it comes to choosing sites.

“You’re dealing with passionate consumers, and they’ll seek out the gear,” Moore said. “You don’t have to be in the most prominent strip mall.”

As it expands, Gander Mountain plans to increase the size of its typical store. New ones will be between 55,000 and 105,000 square feet, versus the 31,000 square feet the current stores average. “We’re looking at a larger format because of the opportunities in the product lines that we can’t fill now,” said Bergmann. The store in Geneva, Ill., for instance, will boast a dealership that sells and services all-terrain vehicles, as well as a pool in which customers can try out kayaks and canoes. Almost all stores have on-site gunsmiths. “We want to allow interactive product use,” Bergmann said.

The typical Gander Mountain shopper is male and between 25 and 55, Bergmann says. Income levels and occupation vary considerably. While the typical general shopper comes from a household with an annual income of $60,000, outdoors enthusiasts range from those who work on the plant floor to those in the executive suite.

“You can be a CEO or a custodian, but you’re both fishermen on Saturday morning,” Bergmann said. “The level of enthusiasm dictates more [than income] how much they spend on the sport.”

Moore agrees, noting that many customers will talk of saving for months to buy a hiking jacket, or of forgoing fast food and other small luxuries to outfit themselves for mountain climbing. “They’ll spend a large percentage of their available funds on outdoor gear,” she said.

Overall expenditures on fishing and hunting in the United States totaled $70 billion in 2001, according to an October 2002 survey issued jointly by the U.S. Commerce and Interior departments.

Holiday Cos., the chain’s parent, doesn’t break out sales for Gander Mountain. But the chain is probably one of the leaders in the category, along with Cabela’s and Springfield, Mo.-based Bass Pro Shops, says Moore.

Gander Mountain distinguishes itself through its emphasis on products, rather than on using massive, eye-catching displays, such as the aquariums in Bass Pro Shops, says Bergmann. “We want the product to be the showcase and to allow interactive product use,” he said.

And store associates offer customers such services as letting them know that representatives from a kayak manufacturer will be in the store on a certain date, demonstrating different products. “The guy down the street may not be able to do that.”

Declining market?
Even with the chain’s current success, challenges still lie ahead. Most significant, younger people haven’t taken up hunting and fishing in the same numbers as their parents. “Generations X and Y have not been taken hunting and fishing to the same extent that the baby boomers were,” said Amanda Nicholson, an assistant professor in the department of retail management and consumer studies at Syracuse (N.Y.) University.

Most hunters or fishers are introduced to the sport as children; as fewer parents spend time on these activities with their children, the number of replacement participants will decline. People between 18 and 24 made up 13 percent of anglers in 2000, versus 20 percent 10 years earlier, Nicholson notes. The number of anglers overall slipped from 35.6 million to 34.1 million between 1991 and 2001, while the hunting population dropped from about 14 million to 13 million, according to the federal government survey.

While the survey doesn’t give reasons for these drops, Nicholson theorizes that the time crunches that face dual-income households make getaway trips more difficult. In addition, many 20-somethings were brought up on video and computer games; they may get frustrated with the more leisurely pace of fishing and hunting. And the political climate may play a role: Hunting enthusiasts face opposition from animal rights activists. Given these factors, many outdoor activities retailers may steadily shift to a greater emphasis on such products as kayaks, camping equipment and outdoor wear, she says.

“Our challenge is to bring them into the fold,” acknowledged Bergmann. To attract these younger consumers, Gander Mountain will rely on finely tuned product selection and its passionate, knowledgeable sales associates.

“Our objective is to create outdoor memories and preserve outdoor traditions,” he said. “As it pertains to nature and the outdoors, we’ll always be there and always focus on how to bring more people into the sport.”

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